‘Financial stress’ likely to blame for Malaysia’s poor varsity ratings, think tank says

KUALA LUMPUR, April 7 — Local private universities are struggling to maintain education standards and improve student outcomes, a recent research said, citing issues like poor management and financial constraints as among key problems keeping ratings low.

According to Penang Institute's analysis of the Education Ministry's 2013 data, 27 per cent of private sector graduates stayed unemployed six months after graduation, compared to 24 per cent of their counterparts from the public sector.

Private institutions here have also been given poor scores in local and international education rankings, the research noted.

It said only 51 per cent were given "excellent" marks in the ministry's "Setara 13" ratings exercise, compared to 81 per cent of public universities.

A total of 16 per cent were given "good" marks, while the remaining one third of private varsities failed entirely to make it to the ratings list.

For research, Penang Institute observed that only one private varsity, Universiti Teknologi Petronas (UTP), received a five-star rating in the ministry's "MyRa 11" list. About 78 per cent, it said, were not rated at all.

On the global stage, only five private varsities appeared in the QS-Asia ranking list for last year, with only UTP taking a spot in the 191-200 range, it said.

"The causes may be due to poor management from the top and tight financial conditions, which are taking their toll on the quality of education in Malaysian private varsities, leading to high graduate unemployment and poor international rankings," the institute said today in the third statement of its research.

It pointed out that approximately 45 per cent of local colleges and universities are operating without inadequate assets to cover existing liabilities, putting some at the risk of bankruptcy.

“Around 35 per cent of all private varsities and 41 per cent of full universities were running on negative reserves, meaning that their total debts exceed their total assets.

“This means that they are technically insolvent,” it said.

For some institutions, the situation was only deteriorating. Twenty eight such local colleges and universities were booking year-on-year losses up until 2013 while over half of foreign branch campuses also failed to make a profit in the same period.

The think-tank also cited the case of the Alliance University College of Medical Sciences (AUCMS), which was forced to cease operations due to funding issues and affecting a reported 2,000 students and 500 staff.

Penang Institute conducted its study using publicly available financial information on 41 private universities, eight foreign branch campuses and 27 university colleges in Malaysia.

The release of the study is in conjunction with today's launch of the National Higher Education Sector Blueprint 2015-2025, which will be officiated by Prime Minister Datuk Seri Najib Razak.

According to Penang Institute general manager Ong Kian Ming, the think-tank's findings will have serious implications on the sustainability of the private higher education sector.

He complained today that the sector was largely ignored in the blueprint as it focused more on public varsities.

"The fact that the private higher education sector was largely ignored is a serious omission given that almost half of the total enrolment in post-secondary education are in private universities, university colleges and colleges," Ong said in a press statement.